Are you risking your Client Relationships by Recommending a Home Warranty Company?

It’s a fairly common practice for RE agents to recommend home warranty companies to their clients and some even pay for the warranties at closing time to protect their sellers. But should agents get involved in recommending companies to clients that don’t deliver?

In this two part investigative piece we sought to answer this question: Are All Home Warranty Companies Created Equal?
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We quickly became quite surprised at what a little research disclosed about this regulated service industry!

There are many websites available to consumers which offer reviews for these services – ranging anywhere from the Better Business Bureau to Angie’s list – but determining which of these sites to use can be quite a challenge, considering that many of the reviews vary greatly from site to site. Old Republic Home Protection, for example, received an A+ rating from BBB.org while ConsumerAffiars.com gave Old Republic one star (out of five). What a contradiction!

This dilemma presents a new question: Which of these sites can a consumer trust? Should you look for the most consistent rating across the board, or is it a better idea to look at the most common complaints a company has received? We think it’s best to do both. Sites such as BBB.org, homewarrantyreviews.com, comsumeraffairs.com, and ripoffreport.com all offer consumers the opportunity to submit complaints about a company, and many of these allow viewers to read others’ complaints as well.

After browsing a handful of these sites we found a few commonly recurring themes – many of which seemed pretty disheartening to a consumer.

The first thing we noticed was the sheer amount of complaints many of these companies have received. Of the numerous home warranty providers we looked at, Home Warranty of America, Old Republic Home Protection, and American Home Shield had some of the most complaints submitted to BBB.org, receiving 455, 750, and 3836 respectively throughout the past three years. With so many complaints submitted to the BBB alone, one wonders if any these providers’ customers are satisfied.

What these disgruntled customers had to say was even more demoralizing. Many of these complaints consisted of reports of unprofessional contractors, who often times showed up late if at all. Many Fidelity complaints talked about contractors stationed out of the area, requiring additional hours – if not days – to complete repairs due to travel. Reports of cheap, almost temporary repairs were another common complaint among many of the largest warranty providers, with many reporting that the device broke again within 24-48 hours after the initial repair. Some reviewers even spoke of changing warranty providers after being unsatisfied with these nightmare contractors, only to find out that their new provider used the same ones.

What seemed to be the most common complaint among all the warranty providers we looked at was the denial of a claim by the provider. While some of these may have been from burnt scammers trying to take advantage of their warranty provider, the majority seemed to be legit claims turned down by loopholes and fine print. The words “misuse”, “lack of maintenance”, and “preexisting condition” were prevalent in the providers’ reasoning behind the denied claim, and in almost every complaint the buyer felt robbed or scammed. In some cases this led to drawn out legal battles which ended up costing the homeowner far more than the initial repair.

So which of these providers can you trust? We’ll discuss our findings in part two of this investigative piece, which will be released next week.

Have you or your clients experienced any of these issues with home warranty providers you’ve suggested? What are your thoughts?

  • Another great article and investigation by RE-Insider. I am looking forward to Part 2 and hopefully some insight for homeowners/consumers on how to fight back. Homewarranty insurance companies, in many ways are no different from the health insurance company before the recent reforms. They consider you honest when you sign up and make monthly payments and you are dishonest the moment you have a claim.